The Real Estate and Business Blog

By now you’ve probably received your Florida property tax bill or ad valorem tax bill.  I know that your reaction was not “Cool, here’s my opportunity to pay my fair share of taxes!”  I know this simply because we have witnessed a run of high property values with correspondingly higher tax bills.  When the economy was robust, there might not have been much complaining on your part.  Now that we are currently in a difficult market, with downward trending property values, we are all a little more sensitive to the costs involved in property ownership.  That is particularly true when your taxes actually go up. 

If you have determined that your tax bill is too high or that the government is claiming that your house is worth more than it really is, the next logical step would be to determine how to appeal the tax bill.  There are also occasions when the value of a property has dropped and the county has not taken that into account, or maybe they have, but just not enough.  There might also be instances where the property assessment has dropped along with the market value and yet the tax bill has increased!  So you’re understandably upset.  I get it.  You want to fight it, but you feel you can’t. 
 
Well, I’m here to tell you that you can.  And I’m going to show you how.  When we’re done, you’re going to realize that it’s easier than you once thought.  All it takes is some patience and determination and you’ll be able to save hundreds, if not thousands of dollars.

The Ad Valorem Tax.  What Is It And How Is It Calculated?

The ad valorem tax is defined by Black’s Law Dictionary as a tax imposed according to the value of property. It is the Latin phrase for “according to value”.  It is commonly imposed by states, counties, and cities on real estate but is also used to tax other property.

The amount of the tax bill is determined as a percentage of the value.  The percentage is the tax rate (or millage rate – we’ll use these terms interchangeably) set by the property owner’s municipality and it is applied against the assessed value of the property itself. 

The assessed value is the value that the government has determined your property is worth.  The tax rate (or millage rate) is the rate the government determines is the amount that needs to be applied towards all assessed property to come up with the amount of tax money they need to fund their budget.
 
One would then correctly conclude that the combined assessed value of all the properties in the municipality (called the tax base) would then determine the total amount of money the government will collect. 

You would then conclude that it is in the municipality’s best interest to assess the property at its maximum value, if not more.  This would, for argument sake, give you the ammunition needed to contest the government’s determination of your property’s value.  But this is not always the case.
 
You see, the municipality works out the numbers backwards.  It first puts out a proposed budget which provides the total amount of tax dollars that are needed to be raised in order to fund it.  They then take this total and divide it by the combined assessed value of all the properties (again, the tax base).  The resulting number is the tax rate or millage rate.  I’ve simplified this a bit, but bear with me here.  The millage rate is equal for all property owners within that municipality.  In the aggregate, the millage rate is not tied to the market value of the properties, but rather just the assessed values.  In other words, the taxes paid are determined by the assessed value and not necessarily the fair market value of the property.
 
Therefore, the municipality can assess the properties well below fair market value and still raise the same amount of money had it been assessed at its maximum.  All it requires is a higher millage rate, which, as I’ve already stated, is determined by the municipality’s proposed budget. 
 
Since the tax is set by the budget and the tax rate, a property owner’s tax bill might go up or down regardless of what the assessed value is.  One individual could even find that the assessed value went down, but the tax bill went up!
 
The key here for the individual property owner is not necessarily whether the assessed value of his or her property is too low or too high, but whether it is fair in comparison to other properties that are similar.   

How Is The Value Of Real Property Determined?

As previously stated, the key is to determine what the Fair Market Value of the property is and, along with the Assessed Value, how it stacks up against similar properties.

“Similar properties” or “similar sales” are those properties that have recently sold and reasonably resemble the subject property taking into consideration such factors as location, size and sales price.  Other factors considered are conditions surrounding the sale, such as date and character of sale, advantages and disadvantages, and whether unimproved, improved or developed.  “Similar” requires that the property is reasonably near, usually within a one mile radius of the subject property, with the same amount of bedrooms, bathrooms and built and designed similarly.

There is no specific rule to determine the degree of similarity necessary for the property to be adequately considered a comparable property.  This is where the disagreements will occur with the municipality’s Property Appraiser’s assessment of value and is where the property owner will fail or prevail. 
 
When the Fair Market Value assigned to a property is greater than that of a similar property, there are grounds for an appeal. 

The obvious question here is: What does the fair market value have to do with the assessed value?  Well, if it can be proven that the market value is less than that which the Property Assessor established, then the argument would then be that the assessment is also lower.  In this situation, ratios need to be reapplied and, under the right circumstances, the argument can be won.  Ratios should be uniform across neighborhoods and districts.  In other words, if similar properties have assessments at 80% of fair market value, a proven decrease in the fair market value would therefore mean a proportional decrease in the assessed value.   Be aware, however, that homesteaded properties carry lower ratios because of the limited annual increase allowed.  Therefore, when calculating ratios, homesteaded properties should be excluded (with the exception of properties purchased and homesteaded at the same time as the subject).

A SPECIAL NOTE ON HOMESTEADED PROPERTIES:    If the subject property so happens to be homesteaded property, a notable distinction must be made.  As long as the market value of the property does not fall below the assessed value, Florida’s Save Our Homes law allows the Property Assessor to increase the assessed value by 3% or the Consumer Price Index, whichever is less.  Due to this law, the municipality is able to recapture some of the assessment increases they would have benefited from had the homestead exemption not applied.  In other words, homesteaded properties benefit from limited increases to its assessed value from year to year.  Therefore, when there is a decline in market value, the Property Assessor can then recapture some of this lost assessment value by not lowering the assessed value, in fact they can actually raise.  This year, the assessments on homesteaded properties increased according to the CPI figure of 0.1% (actually, it is a tiny fraction less than 0.1%) when fair market value did not fall below the assessed value.  On the other hand, when homesteaded property experiences a drop in fair market value below that of the assessed value, then the Property Assessor must lower the assessment to the fair market value of the property, but is not required to go any further down.  If one is contemplating the challending of an assessment on homesteaded property, the initial analysis is to determine if the market value dropped below the prior year’s assessed value.  If it did, then both figures should be equal (if they do not equal, there is a basis for an appeal).  If the fair market value did not drop below the assessed value, then the assessed value should have only increased by 0.1%.  Under these circumstances, if the assessment increased more than the 0.1%, then there are grounds for an appeal. 

POINTER:  Another necessary investigation requires that one access the property tax records at the county Property Assessor’s office (or website, if it has one) to find “material” inaccuracies in the data pertaining to the square footage of the structure, square footage of the lot, the number of total rooms, the number of bedrooms and bathrooms, the classification of the property (residential as opposed to commercial), etc.  It is also imperative that the actual tax bill be examined to ensure that all exemptions were applied, if any.  An example of an exemption is the homestead exemption, but there are others.  Also, if the property has been damaged by fire, wind or flood, the assessment should also take this into account.  If square footage of the property was increased or decreased, this too would affect the assessed value.  Each case is different and one must take all relevant information and review for any inaccuracies. 

Furthermore, one must not focus so much on the tax amount due.  The tax due might go up or down on any given year and the assessed value amount still remain constant.  Also, one must not get caught up with the separate assessments listed on the bill (for example, school district, fire, etc.), as the total amount due is what is required to be paid.

It is important to understand the dynamics between increasing or decreasing property values and what the municipality is actually taxing.  When properties benefit from increasing values, the municipality would, in theory, lower the tax rate or millage rate to collect the same amount of tax dollars as the previous year.  Of course, the tax rate must decrease enough to offset the increase in assessments.  Since tax bills are calculated by applying the tax rate to the assessment of properties, without a decrease in the tax rate, increases in assessments will naturally lead to a higher tax bill.  While I doubt that it happens often, I am sure that some municipalities have, from time to time, lowered their tax rates to compensate for higher assessments.  The cynic in me, however, tells me that most budgets will increase if politically feasible.

We recently witnessed a boom in the real estate market where prices were soaring.  Whether or not a particular municipality lowered their tax rate to adjust the taxes collected on higher assessments would have to be determined on a case-by-case basis.  Municipalities could have maintained the same tax rate on higher assessments thereby growing the amount of taxes collected for their budget while remaining under the political radar, sort of speak.  Few, if any, of the constituents were even aware of the increasing budgets because, after all, the municipality could declare that the tax rate remained the same.  We are, however, currently seeing tax payer protests regarding these taxes. Budgets are proposed and voted on in August and September, so this is the time to speak up. 

Now that the proverbial real estate bubble has burst, the situation is different.  With declining real estate market values, the municipalities must raise their tax rates in order to simply maintain their budget levels from the previous year as assessments decline.  While it might not be obvious, for this to occur, the overall assessments would have to decrease.  The assessment, however, does not necessarily have to decrease on a particular property.  Each property is different.  It is the overall effect of decreasing assessments that causes this situation.  Whether or not municipal budgets grew too big during the real estate boom is outside the scope of our topic, but suffice it to say that municipalities have come under scrutiny for having recently raised tax rates to meet their current budgets.

Politically, the municipality likes to see overall assessments increase from year to year.  If the overall assessments increase, the municipality would be able to collect more tax dollars without increasing the tax rate.  When the overall assessments decrease, the municipality would have to raise the tax rate just to collect the same amount as the previous year – what could end up being political suicide for the elected officials. 

Common Errors on Property Assessment Data

• Square footage of lot incorrect
• Lineal footage of lot incorrect
• Land restrictions (wetlands, building moratoriums, etc.) incorrect or not accounted for
• Style or usage (residential vs. commercial) incorrect
• Age of structure incorrect
• Condition of property – more worn out or obsolete than indicated – kitchen or baths are outdated
• Square footage of structure incorrect
• Square footage of air-conditioned areas incorrect
• Number of total rooms incorrect
• Number of bedrooms or bathrooms incorrect
• Size of garage (one vs. two car garage) incorrect or carport listed as closed-in garage
• Amenities (pool vs. no pool) incorrect
• Window air-conditioning units vs. central air-conditioning
• Major damage not accounted for (fire, wind or flooding damage)
• Septic tank vs. sewer connection
• Type or quality of roof incorrect
• Flooding issues not accounted for (flooding of street during rain storms)
• Nearby conditions not accounted for (rental apartment buildings, malls, dump sites, airports, etc.)
• Zoning restrictions or easements not accounted for
• Statutory guidelines not followed
• Increase of assessment greater than allowed by law (homestead exemption limitations)
• Valid comparables ignored or eliminated from valuation
• Computation of tax amount incorrect

CAUTION:  Be weary of arguing that the property is in disrepair or has deteriorated substantially.  When arguing that the property is in disrepair, damaged or otherwise not in the same condition, but worse, as the properties surrounding it, bear in mind the risk involved in doing so.  The municipality’s Property Appraiser’s office (or Property Assessor’s office) may alert other agencies or departments of the condition of the property.  By forcing the repair and following its progress to completion, the Property Assessor may then be able to reassess the property and arrive at a higher assessment at that time.  Of course, if the property is damaged by some calamity such as fire or windstorm, the Property Assessor should be able to understand the circumstances and not follow suit with a reassessment once the repairs are completed.  Another issue to consider is when an addition or improvement is done to the property.  The Property Assessor will inevitably want to reassess the property at a higher value.

The Three Appraisal Methods

The Property Assessor may use three different approaches to valuating your property. 

The most common approach is the Comparable Sales Market Value Approach.  Here, the subject property is compared to similar properties (also known as comparables) recently sold within a one mile radius.  Any differences between the subject property and the comparables are taken into account by making adjustments to the comparables’ sale prices.  The resulting sales prices (after adjustments) of the comparables are then averaged to come up with a value.  This value is presumably the Market Value of the subject property.  This is the method used by the Property Assessor’s office to value and assess residential real estate (less than 9 units).

A second approach is called the Cost Approach.  This value analysis is based on the cost of the land plus whatever it costs to rebuild the structure.  Adjustments (or depreciation) are made based on the age of the structure.  The resulting figure is the value of the property.  This approach is not always accurate, which is why it is not as commonly used.  This method, however, may be effectively utilized when appealing taxes on new residential properties.

Finally, you have the Income Approach.  This method takes the rental income of the property and analyzes it as an income stream annuity, taking into account all expenses of the property (for example, electricity, water, insurance, etc.) and the inherent risk of the investment.  Obviously, this method works best with rental properties, whether residential or commercial.  This method does not work well with single family homes, even if it is income producing property.

NOTE:  Be prepared to argue against the use of market trends as a factor in the valuation process.  When arguing that an assessment is too high, the assessor or board may claim that the market “trend” in the neighborhood of the subject property shows an increase in value.  In other words, the municipality may claim that values in the neighborhood are rising too fast and the assessment reflects this trend upward.  If it can be shown that the trend is actually downward or that there is no trend at all (flat-line) or even that while the trend is upward, it has not yet reached the assessed value placed on the property, then this argument can be won.  To prove this, recent comparable sales must be provided as evidence. 

Hiring an Appraiser

If feeling overwhelmed by the task of appraising a property, there are licensed appraisers that can be hired to perform it.  Realize, however, that the appraiser will not be at the hearing to defend the appraisal report unless hired to do that as well.  If a property owner decides to attend the hearing without the appraiser, the appraisal report must therefore be detailed enough to help sway the decision – written explanations can go a long way in the argument being made.

An appraiser can provide what is called a “pencil search”.  This report will simply list the properties that may be used as comparables without making adjustments against the subject property.  The appraiser does not visit the subject or comparable properties.  In other words, it is raw data and a thorough analysis is not made.  This can be a good starting point for the property owner, giving him or her more confidence in the comparables selected while saving some extra expense of a full appraisal.  The property owner must then analyze the data further and detail the process in preparation for the hearing. 

A “Certified Appraisal,” however, is a full appraisal.  It is thorough analysis of the data with explanations as to the comparables selected, adjustments being made and conclusions presented.  Visits to the subject property and the comparable properties are required.  This report carries the most weight at the hearing as evidence that is supported by an expert in the field.  Depending on the property owner’s budget, this is the most useful and effective report that can be obtained, but also the most expensive.

The property owner may procure an appraisal report that falls somewhere in between a pencil search and a certified appraisal report.  An appraiser can take a pencil search and analyze the data and make adjustments with explanations, but without visiting the properties.  Obviously, this is a deficiency that the Value Adjustment Board may notice and question, but overall would be better suited to help the argument than a simple pencil search. 

Finally, it is important to be aware of the Property Assessor’s bias towards its own comparables and results.  The Value Adjustment Board will also put greater weight on a Property Assessor’s conclusions as to value than that of the property owner.  Therefore, if the owner is not able to properly evaluate the value of the property or justify the data, the assistance of an appraiser is highly recommended.  Unless there are obvious inaccuracies in the Property Assessor’s property data (as previously explained), the Value Adjustment Board will accept the initial assessment as correct if the property owner does not adequately establish that it is wrong or unfair.  The simple truth is that the burden of proof is on the property owner. 

The property owner must ensure that any attempt at valuating the property and defending the conclusion takes this into account. That is, that the appraisal effectively establishes that the assessment is wrong or unfair.  This requires that the property owner not allow his biases to drive the analysis.  The appraisal report must provide adequate comparables and accurate adjustments.  A clumsy attempt at using a property that is not a suitable comparable or making a baseless adjustment would turn, in the eyes of the Value Adjustment Board, what would otherwise be a good and sound valuation into unreliable evidence that does not controvert the Property Assessor’s assessment.

In Miami-Dade County, the Property Assessor will include short sales if the seller listed the property with a Realtor in the open market.  This distinction is very important.  If the property was not listed in the open market, then the Property Assessor will not use the property as a comparable.  Further, properties sold at a foreclosure auction are also excluded as adequate comparables when appraising a property.  It is important to point out, however, that this might not be true of all county Property Assessors.  If the property is not in Miami-Dade County, it is recommended that the property owner investigate as to the county’s policy with regards to short sales and foreclosures.

Another important factor to consider is that the Property Assessor conducts “mass appraisals” and uses quite complicated formulas to derive their market values.  They use statistical analysis to ensure accuracy and point to standard deviations to rely on comparables and to formulate values.  If the sales price between the comparables differs by more than 15% of each other, the Property Assessor will investigate further and make adjustments accordingly.  The Property Assessor is also aware of the value given to waterfront property and will value it accordingly.  Similarly, properties backing up into a strip mall will also have their assessment adjusted to account for this undesirable attribute.

Challenging the Assessment

A tax assessment challenge begins with the filing of the formal appeal.  Most counties in Florida have deadlines ranging from September 8 through September 18.  For specific deadlines, check with your county’s Value Adjustment Board.  There is also a small filing fee to pay.  Again, check with your county for details.

Clieck here for copies of the 2009 appeal forms for Miami-Dade County and Broward County.  For other Florida counties, please check with your local Property Appraiser’s Office or Value Adjustment Board.

Realize that going through the local Value Adjustment Board must occur first before seeking an appeal with a state court.  It is important to note, however, that statistics have shown that the earlier in the appeals process one is, the greater likelihood of success.  Therefore, brushing off an opportunity to informally meet with the Property Assessor or not properly preparing for the hearing with the local Value Adjustment Board with the idea that further appeals are available could be a mistake.  The likelihood of success is greater with the local Value Adjustment Board.  Further, the cost of appealing in court may very well outweigh the savings obtained even if successful. 

It is very important to check with the Property Assessor’s office to determine if it is offering availability for informal meetings to discuss any inaccuracies with the data or with the assessment placed on a property.  If such informal meetings are being arranged, it is highly recommended that this opportunity be taken.  As such, the correction is more likely to occur with the Property Assessor’s office since new or more accurate data can be brought to light to the very source of the assessment.  In other words, the Property Assessor might be more reasonable in accepting new information they simply were not aware of. 

The Value Adjustment Board Hearing

Once the appeal is filed, the property owner must now prepare for the hearing with a Special Master.  If the owner has not already compiled the list of comparable properties and checked for data inaccuracies, now would be the time to do so.

It is recommended that the property owner conduct a preliminary investigation to determine if there are grounds to challenge the assessment.  Although not a terrible miscalculation, should a property owner file an appeal only to later find that the assessment is accurate, the appeal should be withdrawn.

Certainly, if time constraints simply do not permit for a preliminary investigation, by all means file the appeal if you feel that the assessment is wrong or unfair.  Indeed, once the deadline to file the appeal is missed, a challenge for the current assessment will not be allowed unless the property owner can show cause.  This scenario is outside the scope of our topic, but suffice it to say that the appeal must be filed before the deadline.

NOTE:  In order to obtain early payment discounts on your property taxes, the tax bill must be paid when the discounts are being offered.  The filing of the appeal does not toll the time for payment of the taxes when they are due nor for the availability of early payment discounts.  If the appeal is successful, a refund would follow.

Property owners are given sufficient time to plead their cases, but long and drawn out arguments are counter-productive and might not even be allowed.  If the argument is prepared and practiced in advance, there should be no need for it to be lengthy.

Obvious data inaccuracies are easy to argue and prove.  Usually, the Value Adjustment Board is quick to accommodate these property owners without much resistance, unless the discrepancies are found to be immaterial.

Value Adjustment Board hearings are informal to the extent that the Rules of Civil Procedure and Rules of Evidence are not followed. There are, however, some procedures to follow.  For example, the property owner must provide the Value Adjustment Board with a packet, presumably containing the evidence that will be presented at the hearing.  In turn, the Property Assessor’s office must provide the property owner with the information and data used to arrive at the assessment, which contains the comparables used to valuate and assess the property. 

This process, called the Exchange of Information Period, occurs 15 days prior to the hearing and allows the property owner to better prepare for the Property Assessor’s arguments at the hearing.  A property owner should check with their local Value Adjustment Board to determine exact deadlines and procedures for the Exchange of Information Period for their particular case.

The packet should contain a cover letter supporting the request for an adjustment to the assessment and include all relevant proof.  Relevant proof might include:

• market analysis
• data (with adjustments) concerning the comparables properties used (including photographs) and explanations for the adjustments being made
• copy of the subject property’s data sheet at the Property Assessor’s office;
• copy of the sales agreement (if the property was recently purchased and if relevant to the argument)
• copy of the actual tax bill
• copy of a formal appraisal, if one was obtained

The packet should briefly explain the negative circumstances that might impact the value of the property such as nearby airports, waste sites (especially if toxic), flooding issues, neighboring homes in disrepair, nearby commercial or industrial properties and apartment buildings, heavy traffic areas, etc.  Pictures and other supporting documentation depicting or describing the undesirable elements of the property and the impact they have on the property are very helpful as well.

Overall, it is important to provide a written basis for the argument.  Saying that the assessment is unfair or inaccurate, without proving it, is a recipe for disaster.  The Value Adjustment Board will only be persuaded by the credible and relevant evidence that is presented.  If circumstances are proven to exist, but their relation to the assessment or value are not shown, the argument is not sound.  As an example, if an argument is made that there is a waste site nearby, but the waste site is too far to have an impact on the property value, the Value Adjustment Board would be hard pressed to buy into the argument that an “economic adjustment” is required because of the waste site’s negative affect on the value of the property.  Another common mistake would be to argue that the property has been on the market for some time, but has not sold.  The Value Adjustment Board would simply not factor this into their decision.

During the hearing, one must conduct themselves in a professional manner at all times. This requires that the property owner dress appropriately – although a business suit is not necessary, it can’t hurt.  Ensure that cell phones are shut off.  Being attentive to other appellants that present their cases beforehand allows one to get more comfortable with the way the Special Master is handling the cases before them and may provide an opportunity, not only to hear what arguments are not working, but also to determine which are.

Since a packet has been provided to the Value Adjustment Board, the property owner can simply provide an overview and direct the Special Master to the evidence in the packet while it is being presented.

The Special Master may ask questions pertaining to the property and the evidence provided in the packet.  While the questions are usually simple and easy to answer, the property owner should feel at ease knowing that most questions can be answered by the evidence or with the knowledge the property owner already possesses regarding the property.  If the evidence is not compelling or the property owner is not prepared, the responses to these questions will reveal it.

Before the hearing and while preparing for the argument (including the preparation of the packet), the property owner should have a clear idea of what to request.  In other words, if the comparables are in the property owner’s favor, the argument should focus clearly on what value would result if this evidence is accepted as credible and relevant.  If there is an inaccuracy in the Property Assessor’s data, the property owner must be prepared to argue what the reduction in the assessment should be and why. 

The property owner must be able to substantiate the request by providing relevant facts, data and evidence that support it.  This also holds true when in informal meetings with the Property Assessor.  “It is, because I say it is” will not be sufficient to convince the Special Master, no matter how willing he or she might be to help the property owner.

Throughout the presentation, the market value reached by the evidence submitted should be tantamount.  The property owner must focus on this value and present the evidence that sheds the most favorable light upon it and substantiates it.  Also, the argument should be made that the assessment should be lowered to coincide with the tax ratio being used by the Property Assessor’s office.

While the comparable sales market value approach may be the most relevant appraisal method, the cost approach and income approach should be used to substantiate the market value as well if it is relevant.  One must not, however, feel compelled to use either one if it would not help the argument being made.  The purpose here is to convincingly argue to the Special Master that the market value derived by the appraisal is overstated.  It is only obvious that one must not be afraid to exclude evidence that does not help the argument, while presenting evidence that does.

The use of maps to show the comparable properties’ location in relation to the subject property and other exhibits are also very helpful in presenting the case.  Exhibits tend to show that preparation and analysis went into crafting the argument and can be compelling if used properly.

Allow the presentation to flow like a story about how the tax bill arrived and how the assessment was analyzed and determined to be inaccurate or unfair.  Conclude with the amount that should have been assessed if all the relevant data, as presented, were taken into account.

And end by the thanking the Value Adjustment Board for the opportunity to be heard.

Our Current Tax System

An ever increasing tax burden is an almost certainty under the current system of assessing properties.  Even when property values drop, the tax burden often increases nonetheless.  The system should be revised to the extent that the method of assessing and taxing is fair and affordable to all property owners.  The municipality should have all properties assessed at 100% thereby taxing based on full market value instead of depending on Department of Revenue ratios being handed down.

Property owners, however, are not innocent either.  Many lack an awareness of the system of property tax assessments and taxation and fail to recognize that the services they request and benefit from come at a cost.  Certainly, the municipality can not provide services, whether fire, school or sanitation, without a budget to do so.

The services provided by the municipalities can improve as well.  Government inefficiencies add to the cost involved while providing less and less services overall. 

As citizens and taxpayers, we need to work with others and the government to find solutions to ever rising property taxes and to find alternative methods of raising revenues in order to lower the tax burden on property owners.

Should a Professional Be Hired?

As previously discussed, a property owner can hire an appraiser to help prepare the information and evidence to be presented at the hearing.  A property owner can also hire a professional to present the information and evidence at the hearing. 

If time is an issue for the property owner, or the particular case is complex, there should be no hesitation to hire an attorney or property tax consultant to both prepare the evidence and present it at the hearing.  Even when the property owner has the time and relative ability to do all of the legwork and present the case at the hearing with the Special Master, seeking the advice of a professional may still prove to be very helpful.

A professional will be able to provide the property owner with an opinion as to the value of the property and the likelihood of success at a hearing.  This can be done early in the process to avoid unnecessary expense by the property owner.  The sad truth is that sometimes the property owner must concede and simply (and sometimes reluctantly) pay the property taxes that are due.

An attorney or property tax consultant can be hired to prepare the information (the appraisal, along with all other relevant data) and present it at the hearing.  The property owner need not spend time determining value or investigating procedures and then preparing for the hearing.  In fact, when a professional is hired, the property owner does not even need to appear at the hearing.  Again, the factors that the property owner must evaluate are the time constraints and the relative complexity of their case.

To find an attorney or property tax consultant that is knowledgeable in property taxation, a property owner can start with their own lawyer.  Real estate lawyers, in particular, are able to provide information on property taxes and help refer clients to other attorneys or tax consultants that have experience with property tax appeals.

Most lawyers and tax consultants charge, as a fee, a percentage of the tax savings obtained for the property owner.  These percentages usually range between 10 and 30% of the savings obtained, but may be more.  In other words, if the total savings are $1000, then the fee would be between $100 and $300 depending on the agreement the property owner has with the lawyer or consultant.  If the professional is unable to obtain a reduction of the tax bill, then the property owner owes nothing.  This is a way of the professional guaranteeing a good result – a fee contingent on the reduction of the tax bill.  Bear in mind, however, that each lawyer or tax consultant charges differently.  Sometimes the professional might charge a flat fee or hourly fee regardless of the outcome.  Others might charge a flat fee and a percentage of the savings.  The property owner must review the engagement letter thoroughly and understand what fees will be charged and when they are due.

As discussed previously, the property owner may simply hire an appraiser to prepare the data necessary for the hearing, while the property owner, himself, presents the case and argues the merits at the hearing.  A disadvantage in doing this, though, is that an appraiser must be impartial in determining value.  If the appraiser finds that the Property Assessor’s value and determination of the assessment is correct, the appraiser may not be able to disregard the evidence found.  A lawyer or tax consultant, on the other hand, is an advocate for the property owner and can disregard evidence that hurts the property owner’s argument while presenting evidence most favorable.

Whenever a property owner decides to hire a professional – whether an attorney, tax consultant or appraiser, he or she should interview several and determine the professional’s level of experience and the method of preparing and presenting the case.  If the property owner is comfortable with the professional and is assured of his or her reliability, having obtained and checked all references, the property owner should feel at ease that the process will go smoothly.  While hiring a professional does not guarantee success, it certainly provides the property with the greatest likelihood of having the property tax bill lowered. 

Since professionals are available to appeal a property owner’s taxes, then what is the purpose of our discussion?  Well, first of all, as has been described here, the process of appealing property taxes is not complex or too time consuming.  With some time and effort, a property owner can obtain the same results as a professional.  Also, if the tax bill is not substantial (in Dollar terms) – which is usually the case with residential properties, then a professional might not be willing to do the work on a contingent fee basis since the percentage would not amount to much money and therefore might not be worth his or her time and effort. 

Finally, while I disagree with this, some have argued that a professional puts the Property Assessor and the Special Master on guard and therefore the property owner might have a better chance at obtaining results.  While this may be true in certain instances, I believe that the Property Assessor and the Special Master, themselves being professionals, understand the role of the lawyer or tax consultant and feel that the hired professional is better able to present a concise argument with relevant evidence than an inexperienced property owner. 

All in all, the important factors for property owners to consider is whether they have the time, energy and resources to invest in the appeals process given the opportunity costs involved.  Furthermore, the property owner must determine if the case is too complex to forego a professional whether it be to a small degree or throughout the entire appeals process.

If time and complexity is not an issue, our discussion today provides a good starting to point for the property owner to use and guide them through the appeals process.  As always, it is best to consult an attorney, as each case and the circumstances surrounding it is different before proceeding on your own.